Tag Archives: spla licensing

You have questions…We have answers. Another month, and another list of licensing questions asked by the hosting community.

I have a small hosting company that runs primarily Linux machines with a few Windows VM’s mixed in. The only thing we do customer facing with Windows systems is a small number of users access our application via a published app over RDP Web. Do I need SPLA?

Yes. You have Windows running in your cloud environment. It does not matter how small or large the environment is. One thing you might want to check out is the Cloud Platform Suite. You must run Hyper-V and System Center but it could lower your costs.

I get CSP from one reseller and SPLA from another. Do I qualify for the new QMTH addendum or do I need to get it all from one source? Totally confused.

In QMTH, you are the CSP partner, not someone else. I am guessing you are using the CSP reseller to go indirect. If that is the case, you must become CSP Direct authorized. Purchasing CSP from a third-party does not qualify you for QMH. That being said, your customer can purchase CSP from any organization and you can host it for them (if you are QMH authorized).

The audit bug got me. I think it’s because my reseller refuses to submit my usage report even though I sent it to them several times. Any advice?

Microsoft can audit any partner they choose. There’s not one factor that triggers an audit. More eyes will be watching if you are continually delinquent on your monthly report. The biggest reason why a reseller does not submit a usage report is because the provider is delinquent on their payments. Are you up to date? All payments paid to the reseller?

Can I rent a PC using the QMTH addendum? I know in the past I could rent a Windows desktop license in SPLA. Can I do it now?

I think it makes sense to do so but unfortunately it is not part of the addendum. I would love feedback here. Section C of the QMTH addendum states” “This Amendment does not authorize Customer to resell, distribute, or otherwise provide End User or CSP Licensees direct access to Windows 10 Software” In order to lease a PC to a third-party you need to follow the Microsoft Leasing Agreement.

I report Office, Exchange, SharePoint and Skype. I heard rumors of a price increase coming in the pipeline from various resellers that I reached out to. Any truth?

Let me put it to you this way – The products you just mentioned happen to be part of Office 365. I don’t foresee Microsoft lowering pricing in SPLA for the same products offered by Microsoft.

I sat in on a webinar this afternoon and was really impressed with the different capabilities within SQL Enterprise. I always sold SQL based off virtualization needs. What a goof. Although important, there are several other factors that go into licensing SQL Enterprise as to Standard or Web.

Let’s first break the different components down to better understand the differences.

SQL Web – Basic SKU. Designed for hosting web apps and websites. Many hosting providers try to license SQL Web to support line of business applications. (which you cannot do by the way) Think of line of business applications as applications to run your business. (very poetic by the way).

SQL Standard – The most common reported SKU in SPLA but also the one that gets service providers in trouble; especially as it pertains to virtualization and mobility within server farms. Offers some high availability, although not as complete as Enterprise. Database size is also an issue as it only supports up to 64GB. Sounds like a lot, but ask a SQL admin how much that really is. Newer editions offer mobility rights, and can be licensed on a per VM basis. Not a bad thing.

SQL Enterprise – Ahh…SQL Enterprise. This cost a lot doesn’t it? Man, how can someone afford this month end and month out? Ask your reseller what’s the difference between Enterprise and Standard and the first thing they will say is virtualization. (that’s what I did too for the record) Although true, there’s more to this than just virtualization. For starters, the size alone is more than Standard. (See chart below). High availability with Enterprise is truly high availability. It’s always on (Failover cluster instances and availability groups). Although costs seem high, if data is lost, how much will that cost you?

SQL BI – The in between SKU, meaning its similar to Standard, but not as robust as Enterprise. In the SPLA world, it is licensed by user only. This “Jan Brady” of SQL has…..you guessed it….BI features. This SKU is very rarely reported. If I had to guess, she will be merged or have licensing changes with future releases. No basis or knowledge, just an educated guess.

So back to SQL Enterprise. I think the service provider community should listen to what other hosters have to say about SQL. Let’s look at the real IT wizards (also known as ISV’s – those that develop applications) do with SQL Enterprise. If you look at the chart below, this illustrates the features they use within Enterprise the most (Source: Microsoft)

You can see (kind of unclearly) that scale and performance outweighs everything else. “Scale and Performance” means data compression, table partitioning, etc. Over 23% say HA/DR is the most important feature. (always on). I like to listen to these guys (ISV’s) since their business (their application) is only as good as the technology it resides on. If they rely on a certain product over the other, I would like to better understand…why? From the chart, it’s no surprise that performance ranks #1. Imagine if performance was bad? How good will their application look then? So if they trust SQL Enterprise based off performance and HA…maybe you should give it a second glance.

From Microsoft, here’s the top 10 reasons hoster’s should consider Enterprise. Oddly enough, virtualization wasn’t one of them.

There are three deployment options for service providers – Hybrid (mix of on premise and cloud) Dedicated, and Shared. In this article, we will break each one down to explain how they work and the options available.

Dedicated Scenario – (3 options available)

Option 1
Your customer decides to bring their own software (such as Exchange) and infrastructure (Windows) via their own volume licensing agreement. They do not have software assurance on the software. Can they do this?

Yes. Why? Everything is dedicated. Server, virtual machine all dedicated to one single organization. Software Assurance is NOT required.

Option 2
Your customer decides to bring the software but the hoster will provide the infrastructure in a dedicated environment. Again, customer does not need Software Assurance if it’s a dedicated environment. In this scenario, the hoster (you) will provide the Windows license via SPLA and not report the other applications the customer brings over since it is already covered via their own volume licensing agreement. This is applicable, it’s dedicated (VM and physical servers)

Option 3
Your customer is a healthcare company that needs a dedicated environment due to regulatory compliance. They do not own any software; they would need the hoster to supply the software licenses. Can they (the hoster) do this? Yes, the hoster would report everything under SPLA. The hoster (you) CANNOT use your own volume licensing agreement to provide the solution but you can certainly provide SPLA. Please be aware that if you own a volume licensing agreement, you cannot use the same hardware your volume licensing agreement resides as your hosted solution.

Also keep in mind that SPLA is non perpetual, when the customer leaves, they can no longer use the software they were accessing.

Summary of Dedicated –
Dedicated is applicable for both SPLA and end customer owned volume licensing. Dedicated also means dedicated hardware and dedicated VM’s. In dedicated environments, the end customer DOES NOT need software assurance. From a compliance perspective, it is defined as the following:

“Any hardware running an instance of Microsoft software (OS or application) must be dedicated to a single customer. For example, a SAN device that is not running any Microsoft software may be shared by more than one customer; since, a server or SAN device that runs Microsoft software may only be used by one customer.” (source: Microsoft VDA FAQ)

Hybrid Scenarios – 3 options available

Option 1
You decide to offer your customer a shared infrastructure but they want the same applications to run on premise. A good option would be to have the customer purchase the server applications (think Exchange, SharePoint, Lync) with software assurance (SA) and run them on premise. You (the service provider) would run the same applications in your shared environment BUT report the SAL for SA SKU. Much cheaper option than standard SPLA prices. I wrote about this here This also works well for Disaster Recovery options.

Option 2 (not really a hybrid but just go with it)
You can use license mobility. Microsoft likes to define this as a “hybrid option” but to me, hybrid insinuates the ability to run on premise and in your cloud. License mobility is a SA benefit for certain applications (SQL, CRM, SharePoint, Exchange, Lync) that allows customers to leverage their investment in SA and transfer those licenses into a hosters shared infrastructure. Reason why I don’t think this is truly a hybrid is the customer is TRANSFERRING licenses into your datacenter. This means that if a customer wants to move back to their own datacenter, they have to wait 90 days. (transfer license rule). With SAL for SA, nothing is being transferred. Windows does not have mobility rights, this will need to be reported under your own SPLA. I wrote about license mobility many times – here’s an article for your review – here You can also check out the Microsoft site for more of a definitive definition http://www.microsoft.com/licensing/software-assurance/license-mobility.aspx

Option 3
Good Ole’ SPLA. Customer can run their own servers on premise, you just report SPLA licensing in your shared environment. The new SPLA agreement even allows you to run SPLA software on customer owned hardware as long as you still manage it.

Shared Scenarios – 2 options

Option 1
License Mobility – see above

Option 2
SPLA. We all know what that is.

Summary

I hope this brings a bit more clarity. Sorry if some things are redundant but at the same time, some things are simply worth repeating. Here’s the takeaway – customer’s can always bring licenses into your datacenter. There is no law of the land that prohibits this. What is prohibited is the way you deploy the technology. There is only one option to install customer owned licenses in a shared environment and that is license mobility. Again, (here I go being repetitive) if Microsoft allowed customer owned licenses to be installed in shared environments than why would they create license mobility?

If you still have trouble comprehending all this, shoot me an email located at the top right of this page. One general rule of thumb – if it’s shared – 90% of the time SPLA is required.

I was on a call the other day and the customer was pleasantly surprised to learn about the SPLA program. Although I do not manage the program in its entirety like the old days, I will say this was a refreshing surprise. When you mention SPLA to a customer, account manager, or even Microsoft, more times than not you here a groan. ABS – Anything But SPLA! I am sure if there are resellers reading this, they would probably agree. Why no love for a program that is growing exponentially year/year? What are better alternatives…buy the licenses outright?

I don’t think the issue is with the program itself; after all, the ability to get started with zero upfront costs from a licensing perspective is pretty cool! I don’t even think the licensing is all that difficult once you get started. The pain point is understanding all the “gotcha’s” and the “in’s” as well as all the “outs” to make sure what you are doing is both compliant and cost-effective. SPLA is an honor based system, but if you are found dishonest, it will cost you.

One of the biggest hurdles is tracking licenses. With the release of Azure, license mobility, and regular SPLA licenses, the ability to track licenses is becoming more complex. End customers do not want to double pay for licenses already purchased and service providers don’t want to report SPLA if they don’t have to. So what do you do?

That’s where my old friend named Sammy comes in. On premise customers have used SAM (Software Asset Management) for years as a mechanism to track licenses purchased and/or deployed. This is not a one time snapshot, (although I guess it could be if you want it to be) but an ongoing strategy to make sure licenses are being consumed properly. If they are not, at least they catch the problem before they get audited.

Service providers are different; very few have a SAM strategy. Most service providers are taking part in license mobility and customer owned licenses more regularly. If you don’t believe me check out all the license mobility partners on Microsoft’s website. If you thought SPLA is complex, try combining on premise licensing and SPLA and see what you have!

What does SAM really do? It’s a strategy. It will give you tools and a team of experts to help guide you through the ever-changing license use rights (SPUR or PUR for those playing at home). In most cases, it provides you with the necessary resources to help protect you from vendor audits. There are different levels of SAM to cater towards different types of environments. Just like service providers, no two environments are the same.

Here’s my advice (if you are wondering) – if you are a service provider, get a SAM strategy in place. There’s a saying I read somewhere ( I believe LinkedIn) that said if you think audit prevention is expensive, try being audited. (paraphrased here but you get my point).

If you don’t have a SAM resource, email me, (blaforge@splalicensing.com) I can be your SPLA/SAM resource. I guarantee I know the program better than most. You can also check out our SAM services at SoftwareONE here

I’ve written before on how partnering with an established provider can save you money, especially as a short term solution to get your hosting business started. What I haven’t really addressed is the licensing.

Data Center Outsourcing is essentially what the name applies. “Data Center” and “Outsourcing”; you outsource your data center. Amazing how that works. Microsoft definition is a bit more confusing – amazing how that works too. From the outsourcing guide:

“A Data Center Provider is a Service Provider that provides Software Services, usually IaaS, to another Service Provider using Products licensed from Microsoft through its own SPLA..”

Microsoft Azure is a good example of a data center outsourcing company. When you sign up for Azure, Windows will be included in the service. They are essentially providing the infrastructure (Windows and/or SQL cores) and you provide the application licenses via your own SPLA. When you leverage another service provider who provides the infrastructure, they must be providing the Windows licenses. Hmmm…here’s why.

Let’s say you have a signed SPLA agreement to offer Exchange to your clients and you decide to use Brett’s Hosting to provide the infrastructure. Brett’s Hosting offers a public cloud environment (multiple customers sharing same resources). Under this model, you will report Exchange licenses for each user that HAS access to the software and NOT report Windows under your own SPLA; Brett’s Hosting would report Windows via their own SPLA. Why? If it is a shared environment, there is no way Brett’s Hosting can allocate processors for you to report it. SQL cores works the same way. Still don’t believe me? Check out the FAQ guide from Azure here. Notice under SQL it states you can purchase a VM or use SAL licenses. Notice under Windows it states Windows is included with your agreement.

Here’s the bottom line, if you decide to outsource your data center to a public cloud provider, ask them how they manage the Windows OS. If they say it is not included in the cost of the service and you should be providing the licenses, they are out of compliant.

That being said, if you provide data center outsourcing services, I think you are in the right business. This is the fastest growing area within the hosting industry. Windows is relatively inexpensive from a licensing perspective, especially as you add more VM’s and can capitalize on the Data Center edition. (remember…unlimited VM’s). SQL can get a bit more complex, but if you understand it I think that could be an added value over your competition. Last, because you report Windows and SQL only and let the service provider control the user based licensing; it limits your compliance exposure. (processors/cores are easier to track).

So are you a data center outsource or a service provider? Do you work with someone to resell your solution or do it alone? Would love to learn more about your offerings. If you need guidance or best practices or just want a second opinion from a licensing perspective you can email me at blaforge@splalicensing.com.

Now it’s time to get into the fun part; the licensing scenarios that can literally drive you NUTS because if interpreted wrong, it can cost you and your company money. Based on experience, here’s a list of the top confusing scenarios….simplified.

Customer Owned Licenses

Let’s say you have a customer that would like to bring their license into your datacenter. You first ask them if the licenses are legit and if they have software assurance for those licenses. Why ask if they have software assurance (SA). If they have SA on certain software applications, they could be eligible for license mobility (shared hardware, dedicated VM). If they do not have software assurance, now you have to consider dedicating (see dedicated v shared in this post) a server and VM for that customer and that customer only. Without software assurance, they do not qualify for license mobility. So keep this in mind – no software assurance = 100% dedicated hosting.

Now let’s say the end customer owns 100 Exchange licenses (CAL) without SA and they would like you to host Exchange for them using these licenses. No problem, you just dedicate a server for those users. But what happens if they hire 50 more employees that need Exchange? Do you simply add those additional 50 users via SPLA or do they have to buy those additional 50 licenses from their volume licensing agreement? If you picked the latter, you would be correct.

You cannot mix server/CALs on a product-by-product basis. This means the end customer CAL’s for a particular product cannot be used to access servers deployed with that product and which are licensed by the service provider under SPLA. It is ok for a service provider to rely on end customer owned licenses for one particular product (like SQL) but acquire licenses for a different product (like Windows) via their SPLA as long as they dedicate the server. It also means that if an end customer has Servers/CALs for a particular product(s) and chooses to move to a hosted model with a service provider, they will need to acquire any additional licenses for that product(s) under their volume licensing agreement (i.e. if they increase the number of seats or need more servers for deployment or load balancing). It’s not ok for the service provider to acquire SAL’s under SPLA when the number of seats goes up for the end customer or when additional servers is required. This is because the licensing construct of internal use doesn’t match that of SPLA ,and therefore needs to be separate.

Dedicated v Shared

So what does “dedicated” and what is “shared mean?” In short, it means one customer per server/VM for dedicated, and multiple customers using the same server/VM for shared. But what about the other components of a hosted offering? You have a SAN, does that need to be dedicated? No, according to this document it doesn’t (download it here)

“Any hardware running an instance of Microsoft software (OS or application) must be dedicated to a single customer. For example, a SAN device that is not running any Microsoft software may be shared by more than one customer; whereas, a server or SAN device that runs Microsoft software may only be used by one customer.”

So ask yourself “is this running Microsoft software on this device?”

SQL Virtualization

SQL virtualization boils down to five options

1) License per virtual machine (if nothing is running physical)

2) License the physical cores on the host and report SQL Enterprise. (allows you to run unlimited VMs)

3) License both physical and virtual (if reporting Standard or Web and it’s running both physically and virtually)

4) Report SQL Business Intelligence (BI) which is licensed per user and can access multiple servers (physical and virtual)

5) Report SQL Standard per user. Same story as BI.

Don’t forget about license mobility within server farms. A server farm by Microsoft’s definition consists up to two datacenter located within 4 hours of each other. So if you have a datacenter in Seattle and another datacenter in New Jersey; that does not qualify. Likewise if you are in Europe; the datacenter must be “within the European Union (EU) and/or European Free Trade Association (EFTA)

One benefit of license mobility within server farms is it will allow a qualified VM to migrate from one host to the next within the same server farm without adding additional licensing costs. You have to license the machine with the most processors or cores to be compliant. In the Service Provider Use Rights (SPUR) it shows you if the product is license mobility within server farms eligible. Pay attention to this use right; there’s a lot of service providers who are reporting license mobility without license mobility.

Hope this brings some clarity. If you have additional questions contact me at blaforge@splalicensing.com